Political situation is bound to affect a country’s economy. Amid ballooning crisis in Ukraine, the national currency of Russia suffers its first substantial losses in this trading war. The rouble has been heavily depreciating against the greenback and continues sliding to fresh record lows. Thus, it hit the level of 36.4865 for the first time since February 2009 when it was 36.4267. In addition to weakening against the dollar, the rouble also has sunk versus the euro. Leading world experts associate this only with ongoing crisis in Ukraine and most Russian analysts agree with them. “The ruble’s weakening is continuing on the back of widespread capital outflow which is in its turn connected with deteriorating sentiment about the situation in Ukraine and a possible Crimea’s joining to Russia”, Head of Conversion Operations at Absolut Bank Anton Tokmakov said. At the same time, market participants believe Russia’s central bank will not allow the dollar to spike to the threshold of 37 rubles. “Today there are few players against the regulator; however, in case there is a change for the worse, the central bank might start actively spending its reserves to prevent the capital outflow. The dollar is seen to go on trading above 36 rubles”, Dmitry Savchenko, analyst at Nordea Bank said. Such a situation could work in favor of Russian export-oriented chemical businesses as they spend the roubles and earn dollars. Greater positive effect will be for fertilizer manufacturers such as Akron, PhosAgro, and Uralkali.
